Opportunities and Challenges in Indonesian Renewable Energy Project Development: An Investor’s View

摘要

Renewable energy (RE) is a growing potential in Southeast Asia and Indonesia. With abundant centralised agricultural waste resources, bioenergy to electricity generation is an attractive venture as a baseload power source to national grid system. Indonesia is noted in the RE industry to have volatile policy revisions, which has proven it a challenging country for foreign investors to venture into. However, with proper risk management, opportunities are abundant in Indonesian RE. This paper presents the risks and prospects posed by Cenergi SEA Sdn Bhd (Cenergi), a Malaysian RE asset developer, in investing into RE plants in Indonesia. Hurdles faced by Cenergi are various, ranging from technical, commercial, regulatory and socioeconomic issues. Main highlights are financing and policy issues, whereby financing institutions are not familiar with RE installations or refuse to approve innovative and unreferenced projects in Indonesia. Local authorities have contradicting perceptions on policy, given numerous recent national policy changes, creating unstable industry foundations. However, Cenergi finds an unmissable opportunity to develop biogas plants in Indonesia, where natural resource, opportunities, and widespread human capital makes an investor’s expansion prospective. To ensure challenges are capped and potential risks mitigated, all parties have to play a role. Technology providers should compromise and share investment risks, and local stakeholders have to play an active and transparent role. Finally, all stakeholders, from communities to policy makers, must be updated in a timely manner on the ever-changing Indonesian RE landscape.